From: Landis Steven [sdlandis@yahoo.com] Sent: Monday, May 10, 2004 9:12 AM To: rule-comments@sec.gov Subject: File No. S7-11-04: Proposed rule on mutual fund redemption fee Jonathan G. Katz, Secretary Securities and Exchange Commission 450 Fifth Street NW Washington, DC 20549-0609 Mr. Katz: I am writing to you as both a small businessman and a consumer. For over twenty years, I have worked in the financial services field both as a Certified Financial Planner and as an Investment Advisor. Services to my clients include general financial planning and consulting, and investment management services. My clients tend to be "average" people. They are folks who invest primarily in mutual funds for their retirement and their children's education. They are the people who suffered the most during the 2000-2002 market debacle. The damage to their investments was due, in part, to poor mutual fund management, not "market timing" as ill-defined by New York Attorney General Elliott Spitzer. To the point of my letter: I am absolutely convinced that imposing a 2% mandatory redemption fee on mutual funds is unwise and unfair to the majority of mutual fund investors. My conclusion is based on the following facts: 1. Imposing a mandatory redemption fee is equivalent to instituting a tax on mutual fund investors. 2. There is no study that indicates the presence of an industry-wide problem of abusive mutual fund trading. 3. There is no academic study that concludes that a mandatory redemption fee will eliminate abusive trading of mutual funds. 4. Thus, there is no legitimate reason for making the 90% of funds (who do not now have redemption fees) impose a redemption fee. 5. The SEC has for 30 years worked diligently and led the way in lowering the costs of mutual fund investing. Imposing a mandator redemption fees would constitute a radical reversal in SEC policy. 6. Should the SEC impose a mandatory redemption fee, it will be the beginning of a trend that will take redemption fees from "short term" to "long term" with redemption fee time periods of 6 to 12 months. In part, this will be due to the fact that there is little competitive pressure in the mutual fund market place( to encourage keeping the fees on for only a few days). 7. A great deal of short term trading of mutual funds is due to stale pricing of fund shares. To this end, "fair value pricing" is much more effective in quashing short term trading of funds than will a redemption fee. 8. Funds have all the tools they need to control abusive trading of their fund shares. They need only use them to be effective. The solution is not mandatory redemption fees. I thank you for taking time to hear my message and consider the points I have made. Please consider the plight of the small investor and how the SEC can more appropriately develop a solution to the problem of excessive short term trading of mutual funds. Steven D. Landis, CFP ===== "FINDING FINANCIAL SOLUTIONS" Steven D. Landis, CFP Landis Financial & Investment Services 7760 Olentangy River Road, Suite 100 Columbus, OH 43235 614-436-8926 Visit our website at www.StevenDLandis.com __________________________________ Do you Yahoo!? Win a $20,000 Career Makeover at Yahoo! HotJobs http://hotjobs.sweepstakes.yahoo.com/careermakeover